Water crisis: Cape Town drought to have huge impact on SA’s economy

The long-term troubles are starting to emerge

CAPE TOWN, SOUTH AFRICA – FEBRUARY 02: Newlands residents collect water after the start of 6B water restrictions on February 02, 2018 in Cape Town, South Africa. Under the new restrictions, water consumption is limited to 50 litres per person per day in the hope that Day Zero - the day the taps will be closed - can be avoided. (Photo by Gallo Images / Sunday Times / Esa Alexander)

Cape Town has fought tooth and nail to push day zero back to 2019. A large part of that battle has been concentrated on catching the national government’s attention and ensuring that the water crisis was handled by the highest sources of power.

How will the water crisis affect the economy?

However, it looks like there’ll be a large knock-on effect from this water crisis. As reported by Reuters, national structures won’t be able to drag their heels when it comes to taking action this time.

Not only is the drought set to leave a large dent in Cape Town’s local finances, but it’s believed that South Africa’s economy is also under threat.

That same report also focuses on a government communication which says Western Cape agriculture will produce 20% less of its output in 2018. This directly affects trade to Europe, reducing apple, grape and pear exports.

How much of SA’s economy belongs to the Western Cape?

Fin24 report that the Western Cape economy equates to 13% of South Africa’s GDP in total. So if the province was to lose 2% off of its own output, that would take 0.26% off of the national total.

Cape Town has usually been reliant on its water revenue, which yields around 10% of its total output. However, the last 12 months have seen a sharp decline in water usage, as Capetonians fight to save every last drop of water.